Negotiating with Microsoft in June; do you take it to the wire or settle early?

Mark Bartrick

June is a such great month – the days are getting warmer, Wimbledon merges tennis with strawberries and cream, the kids are all pleasantly subdued while revising and sitting exams, the football World Cup is just around the corner, and (how could we possibly forget) it’s also Microsoft’s financial year end.

Many of you will already be in the throes of a negotiation with Microsoft for an Enterprise Agreement (EA) renewal. Or perhaps you are looking at the pros/cons of their Office 365 solution. If you’re planning to take the negotiation to the wire on June 30th in order to squeeze the very best deal at Microsoft’s year end, be aware that Microsoft would like you to dance to a different tune. They are pushing really hard to complete negotiations sooner rather than later. In fact, you might well have been told that Friday, June 20th is their deadline.

Microsoft will tell you that they need a few working days to get signed paperwork through their internal system in order to formally book the deal. While there is some truth in this, it’s also true that the Microsoft sales rep and their reseller doesn’t get commission until the deal has been booked and the revenue formally recognized – hence the pressure to get stuff signed by the 20th!

Whichever date you choose to conclude your negotiation, rest assured that the later it is in June then the more stressed your Microsoft rep will become.

Here are four tips to think about while you negotiate with Microsoft in June:

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Is Software Pricing A Science Or An Art?

Mark Bartrick

I’ve been with Forrester for just over a month now. It’s great to be involved with our clients and communities and to be helping businesses across the world evaluate the quality of software suppliers' proposals from a commercial perspective (e.g., is this a great deal or can the supplier do better?). One of the best parts of being at Forrester now is seeing the continuation of the work I did prior to joining Forrester — advising businesses on software contract and pricing negotiations. One thing I noticed then, and continue to hear about now, is the reluctance of software suppliers like IBM, BMC, CA, and Compuware to publish meaningful list prices or to explain how their price book worked or how discounts had been determined. Time and again I had to ask suppliers to un-bundle prices and confirm the basis for the net prices they were proposing. Does anyone else agree with me that pricing should be clear and transparent and not a black art?  

Here’s an example of an “art” that should be science: list pricing. While it’s logical to think list pricing is the same foundation upon which all bids are built, that’s actually not the case. Often, I found that my clients were being quoted “list pricing” that was different. Isn’t list pricing supposed to be the same by definition? Which is why you may with good reason doubt the validity of a list price or the competitiveness of a discount that you’re being offered by a software supplier. It’s why I love my work, and why you should make sure you get third-party validation of your deals.

How you do validate your software vendors’ list pricing and proposed discounts?